Czech-U.S. Trade Pact Set; Accord With Soviets Seen

By CLYDE H. FARNSWORTH, Special to The New York Times

Published: April 7, 1990

WASHINGTON, April 6—
The United States has concluded a trade agreement with Czechoslovakia's new democratic Government that would cut tariffs and increase business ties and tourism between the two countries, the United States trade representative, Carla A. Hills, said today.

The accord, which is expected to be signed by the two Governments on Thursday, is the second economic pact the United States has reached with an Eastern European country since last year's political upheaval.

Last month the United States and Poland signed a more broadly based business and economic treaty, providing for investment safeguards, protection of patents, copyrights and other intellectual property and the resolution of trade disputes.

Poland is further along in its process of economic change than Czechoslovakia and had already benefited from lower American tariffs.

Washington is also negotiating a trade agreement with the Soviet Union that Mrs. Hills said would be ready for signing when President Bush meets President Mikhail S. Gorbachev of the Soviet Union from May 30 to June 3. ''We're making good progress,'' she told a group of reporters at her office today.

The aim of both the Soviet and Czechoslovak agreements is to confer ''most favored nation'' status on those countries - meaning that American tariffs would be lowered to the level charged against most other trading partners. Tariffs on Soviet and Czechoslovak goods now run as much as 10 times as high as for most other countries.

Both Moscow and Prague are eager to remove an international stigma arising from their failure to qualify for favorable tariff treatment under the Jackson-Vanik amendment to the Trade Act of 1974. To meet the terms of the amendment, which Congress passed in retaliation for the refusal of the Soviet Government to allow Jews and other dissidents to leave the country, the President has to certify that both countries have liberal emigration policies.

This is not expected to be a big hurdle for either country, although the Soviets still have to clear legislation that would codify their freer emigration policies. President Bush has said he will propose a waiver of the Jackson-Vanik amendment once the Soviet Parliament acts.

The trade agreement with Czechoslovakia, as well as the pact expected with the Soviets, is subject to Congressional approval. Congressional aides predicted easy sailing for the Czechoslovak pact.

Anxieties on Lithuania

Approval of the Soviet agreement could be more complicated, the aides said, because of some anxieties over the Soviet handling of the dispute with Lithuania.

The arrangements with both countries cover issues like protection of intellectual property, establishment of a procedure for settling trade disputes, prevention of market disruptions from surging imports, allowances for trade promotion and business representation.

One achievement of the Czechoslovak agreement is that Americans will be treated as Czechoslovaks in establishing bank accounts and paying for goods within Czechoslovakia. Hard-currency earnings may be immediately repatriated.

Czechoslovakia already has in place an ''impressive'' array of intellectual property protections, Mrs. Hills said, and is committed to strengthening its system in various ways.

Trade Below $150 Million

The United States and Czechoslovakia now do relatively little business with each other. Last year two-way trade was less than $150 million.

The principal export items were cow hides, cotton, synthetic yarns and tobacco. The principal imports were special tractors, glass beads, shoes and truck and bus tires.

American trade experts said there was little Czechoslovakia now had to sell that was of interest to American consumers. But with the incentive of lower tariffs, Czechoslovak entrepreneurs could find niche markets in the United States for crystal and other such specialty products, they added.